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The pros and cons of buying a business versus starting one

On Behalf of | Sep 16, 2021 | Mergers & Acquisitions |

There are many businesses out that need someone to step in and take over their leadership, and they’re up for sale. You also have another option: Starting your own company and building it from the ground up. Which one should you choose? 

Each option carries with it a whole host of pros and cons that you’ll want to weigh as you look to go into business for yourself. Why might you want to (or not to) purchase an existing company?

There are a few benefits associated with buying a business that’s already in existence, including how they may already have: 

  • Brand recognition
  • A solid customer base
  • Set (and fine-tuned) operating procedures in place
  • An existing building/location
  • A ready-made staff
  • You have financials to review to check for potential

Downsides to buying a turn-key operation as many would describe an existing business include:

  • The cost to purchase an existing company can be high
  • It already has set processes in place that may require overhauls and fine-tuning
  • You’re at a disadvantage, as the owner, because you need to learn how things function

Some people are totally comfortable investing in an existing business, while others really prefer to build their own enterprise from the ground up.

What are some benefits of founding a startup?

Many positives are associated with founding a startup. You can craft its image from the beginning. Many benefits come with setting your own tone and building connections as a fresh entity on the market instead of one that potential clients and customers may have dealt with before. You also generally don’t need to have as much money on hand to scale a startup from inception. You may invest a lot of sweat equity in getting it off the ground, instead.

The downside to launching a startup is that it can take time to gain brand recognition and sales. 

Which approach to starting your own business is best for you?

Starting any business requires a little effort. Your first job is to decide whether to start your own business or buy someone else’s. After that, you’ll either need to execute a purchase agreement or incorporate your business structure. You must be cautious in doing either one of these so that you protect your interests

 

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